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Auditing Principles CW4-Chapter-1-MC
Auditing Principles CW4-Chapter-1-MC
2. CPAs in public practice who perform assurance engagements are governed by the
following, except
A. Philippine Standards on Related Services
B. Philippine Framework for Assurance Engagements
C. Code of Ethics for Professional Accountants in the Philippines
D. Philippine Standards on Quality Control
12. The overall objectives of the auditor in conducting an audit of financial statements are
I. To obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether caused by fraud or error.
II. To report on the financial statements.
AUDITING AND ASSURANCE PRINCIPLES
13. The auditor is required to maintain professional skepticism throughout the audit. Which
of the following statements concerning professional skepticism is false?
A. A belief that management and those charged with governance are honest and have
integrity relieves the auditor of the need to maintain professional skepticism.
B. Maintaining professional skepticism throughout the audit reduces the risk of using
inappropriate assumptions in determining the nature, timing, and extent of the audit
procedures and evaluating the results thereof.
C. Professional skepticism is necessary to the critical assessment of audit evidence.
D. Professional skepticism is an attitude that includes questioning contradictory audit
evidence obtained.
14. Operational audits generally have been conducted by internal and COA auditors, but
may be performed by certified public accountants. A primary purpose of an operational
audit is to provide
A. A measure of management performance in meeting organizational goals.
B. The results of internal examinations of financial and accounting matters to a
company’s
top-level management.
C. Aid to the independent auditor, who is conducting the examination of the financial
statements.
D. A means of assurance that internal accounting controls are functioning as planned.
17. Which of the following terms best describe the audit of a taxpayer’s return by a BIR
auditor?
A. Operational audit
B. Compliance audit
C. Internal audit
D. Government audit
AUDITING AND ASSURANCE PRINCIPLES
18. Governmental auditing often extends beyond examinations leading to the expression of
opinion on the fairness of financial presentation and includes audits of efficiency,
economy, effectiveness, and also
A. Accuracy.
B. Evaluation.
C. Compliance
D. Internal control
21. In general, internal auditors’ independence will be greatest when they report directly to
the
A. Financial vice-president
B. Corporate stockholders.
C. Corporate controller.
D. Audit committee of the board of directors
22. Internal auditors review the adequacy of the company’s internal control system primarily
to
A. Help determine the nature, timing, and extent of tests necessary to achieve
audit objectives.
B. Determine whether the internal control system provides reasonable assurance that
the company’s objectives and goals are met efficiently and economically
C. Ensure that material weaknesses in the system of internal control are corrected.
D. Determine whether the internal control system ensures that financial statements
are fairly presented.
24. Which of the following attributes is more closely associated with attestation services
performed by a CPA firm than with other lines of professional work?
AUDITING AND ASSURANCE PRINCIPLES
A. Competence.
B. Integrity.
C. Keeping informed on current professional developments.
D. Independence
25. Which of the following procedures is not included in a review engagement of an entity?
A. Inquiries of management
B. Inquiries regarding significant events subsequent to the balance sheet date
C. Any procedures designed to identify relationships among data that appear to be
unusual
D. A study and evaluation of internal control